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How to Make Your Business Presentable So You Can Sell It

When it comes to selling your business, that all-important question, “How much can I get for my business?” is influenced heavily by how you prepare for the sale.

The following five-step plan will help you with one of the biggest decisions a business owner can make.

• • Plan for the sale. Start preparing for the sale two to three years before you intend to put your business on the block. The greater the timeframe, the greater the chance of presenting your company in the most favorable light. The business may look good to you right know, but buyers will ultimately determine what they are willing to pay for the company based on their perceptions of its value.
  
  
• Consider why you want to sell. This gives you insight into factors that may impact your sales price as well as areas you need to address before selling. For example, if you are not generating enough cash flow, why do you think someone would want to buy a cash-strapped business? Come up with a strategy to sufficiently increase cash flow in order to entice buyers.

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However, if you want to sell the business because you have more projects than you can handle, that’s a problem a buyer would probably like to have.

• Clean up the books. Review your profit and loss statement. How does it compare to industry standards and other companies your size? Can you reduce or eliminate unnecessary expenses?

Are you taking advantage of pre-payment discounts? If your suppliers offer a 2% discount for paying early that can translate into annual savings of 36%.

Update your depreciation schedule. Prepare a list of all assets your company owns whether or not they are fully depreciated.

• Clean house. Eye appeal is buy appeal. Before buyers come to see your business, make sure your offices are freshly painted. Remove clutter. Shred old documents. Replace worn out and broken furniture. Update your signage. Organize your paperwork. Make sure the building’s exterior looks as good as the interior.
  
  
• Get a professional business valuation. Your perception of your business’ value may be quite different from what the market will bear. That’s why it’s worth the time and expense to get a professional business valuation. Your accountant or lawyer can help you find the right professional to access your company’s market value. This analysis can be used to substantiate your asking price during buyer negotiations.

Jennifer H. Elder is a CPA and certified management accountant (CMA). She is currently the CFO for Nohl Crest Homes, a semi-custom builder in Tampa, FL.

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“PRO Builder: Business Planning,” available through BuilderBooks.com, spells out the benefits of preparing business plans and provides proven methods for establishing goals, developing strategies, setting priorities and evaluating results. The publication includes step-by-step exercises and an electronic spreadsheet to help you develop a customized plan for your business. To view or purchase this publication online, click here, or call 800-223-2665 to order.

BuilderBooks.com also offers a variety of other publications about business planning and business management. To view or purchase these publications online, click here.

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NAHB’s Business of Building e/Source is your monthly electronic guide to the hot issues and emerging trends in home building business management. You’ll find practical advice, tricks of the trade and sound business guidance — all delivered monthly, straight to your desktop, in a quick and easy-to-read format. Business of Building e/Source is available free to NAHB members and their employees. To subscribe, click here on the members only side of www.nahb.org.

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